Retailers Flourish In IBD 50; Some Near Buy Points

Despite weaker-than-expected December retail sales, retail-related groups remain some of the market's best performers.

This week's IBD 50 list has 14 retail stocks, the most from any industry group. Some top-ranked retailers are near buy points.

Deep discount retailer Dollar Tree (NASDAQ:DLTR) closed tightly for the sixth straight week and has support at its 10-week moving average. The stock is slightly below an 84.09 four-weeks-tight buy point cleared Dec. 27.

Tight trading is a sign of support from professionals such as mutual funds and hedge funds. Domestic fund ownership has grown to 974 funds, up from 853 three quarters ago. Top funds including Columbia Marsico 21st and Fidelity Contrafund and Fidelity Magellan have positions in Dollar Tree.

Rival Dollar General (NYSE:DG) is just above a 40.81 flat base buy point. It found support at its 10-week moving average in the latest week. Dollar Tree initially cleared the buy point Dec. 1, but did so in weak volume. It didn't get very far before pulling back.

One drawback among dollar-store chains is sales growth. Top-line growth at Dollar Tree and Dollar General have ranged from the low single digits to the low teens in the most recent quarters. Generally, CAN SLIM stocks should have quarterly revenue growth of at least 25%.

Hibbett Sports (NASDAQ:HIBB) tried to break out last week. It passed a 47.32 buy point from a square box in soft volume Thursday. Turnover should be at least 40% above average on a breakout. It's now about 2% below that trigger.

The Birmingham, Ala.-based firm has found a niche selling sporting goods in small and midsize towns. In November, the retailer beat views with a 34% gain in Q3 earnings and an 11% gain in sales.

For the week, IBD 50 stocks rose 2.3% on average.

Tractor Supply (NASDAQ:TSCO) was the best performing IBD 50 stock. An upbeat sales report and outlook helped the stock clear a base-on-base pattern. It blew past buy points at 75.58 and 78.32.

A strong outlook also helped yoga apparel and accessories retailer Lululemon (NASDAQ:LULU) to its best week in more than a year. Buyers have returned, but Lululemon is in a late-stage pattern.

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Investor’s Business Daily provides exclusive stock lists, investing data, stock market research, education and the latest financial and business news to help investors make more money in the stock market. All of IBD’s products and features are based on the CAN SLIM® Investing System developed by IBD’s Founder William J. O’Neil, who identified the seven common characteristics that winning stocks display before making huge price gains. Each letter of CAN SLIM represents one of those traits.

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